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The Supreme Court has ruled that the amalgamation of one bank with another does not exempt the successor bank from eviction under the Delhi Rent Control Act if the landlord's written consent for transfer of possession was not obtained. In a judgment delivered earlier this week, the court directed Punjab National Bank (PNB) to hand over vacant possession of commercial premises at Connaught Circus, New Delhi, to British Motor Car Company Ltd by January 31, 2027. The decision concludes a legal dispute spanning nearly four decades and clarifies that banking merger schemes approved by the Reserve Bank of India (RBI) do not override provisions governing landlord consent under the Delhi Rent Control Act.
The Supreme Court has held that the amalgamation of one bank with another does not shield the transferee bank from eviction under the Delhi Rent Control Act (DRC Act) if possession of the leased premises is transferred without the landlord's written consent. In a judgment delivered earlier this week, the court ordered Punjab National Bank (PNB) to hand over peaceful and vacant possession of commercial premises at Connaught Circus, New Delhi, to British Motor Car Company Ltd by January 31, 2027.
A bench comprising Justices Sanjay Karol and K. Vinod Chandran allowed the eviction petition filed by British Motor Car Company, bringing to an end a legal dispute that has continued for almost four decades. The eviction proceedings were originally initiated in 1987.
The dispute dates back to 1947, when British Motor Car Company Ltd leased commercial premises in Pratap Building at Connaught Circus to Hindustan Commercial Bank (HCB). In December 1986, HCB was amalgamated with PNB under a Reserve Bank of India-backed scheme, resulting in PNB taking over possession of the leased property.
Following the merger, the landlord initiated eviction proceedings, contending that the transfer of possession from HCB to PNB amounted to an assignment or parting with possession without obtaining the landlord's written consent, thereby attracting Section 14(1)(b) of the Delhi Rent Control Act.
Under Section 14(1)(b) of the Act, a tenant is liable to eviction if the leased premises are sublet, assigned or possession is otherwise transferred without the landlord's written approval. The principal question before the Supreme Court was whether the amalgamation of HCB with PNB could be treated as an exception to this statutory requirement.
Writing the judgment on behalf of the bench, Justice Sanjay Karol held that even if a merger is involuntary or takes place pursuant to a government notification, it does not exempt the successor bank from complying with the provisions of the Delhi Rent Control Act. The court observed that the statutory ingredients under Section 14(1)(b) were satisfied because possession of the premises had been transferred without the landlord's written consent.
The bench further held that the RBI-approved amalgamation scheme could not be accorded the status of a statutory enactment capable of overriding the operation of the Delhi Rent Control Act. Consequently, the court concluded that the amalgamation of Hindustan Commercial Bank with Punjab National Bank rendered PNB liable to eviction under Section 14(1)(b) of the Act.
The case witnessed differing judicial interpretations over the years. In 1995, the Additional Rent Controller dismissed the landlord's eviction petition, holding that the merger operated as a statutory arrangement binding on the landlord. However, the Rent Control Tribunal reversed that decision in 2001, ruling that the provisions of rent control law prevailed over banking regulations.
Subsequently, in 2012, the Delhi High Court set aside the tribunal's order, observing that the amalgamation was an involuntary act beyond the tenant's control. The matter was thereafter challenged before the Supreme Court, which has now restored the eviction order and clarified that statutory banking mergers do not override the requirement of obtaining a landlord's written consent before transferring possession of leased premises under the Delhi Rent Control Act.
Source - PTI
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